Mortgage rates jump most since October, denting home demand
By Vince Golle | Bloomberg
US mortgage rates jumped last week by the most since October on the back of heightened volatility in the Treasury market, causing a pullback in financing applications for home purchases and refinancing.
The contract rate on a 30-year mortgage increased 20 basis points in the week ended April 11 to 6.81%, the highest since February, according to Mortgage Bankers Association data released Wednesday. Rates on adjustable and 15-year fixed mortgages also climbed.
The jump in financing costs brought an abrupt end to a six-week stretch of increasing home-purchase applications, highlighting home-buyer sensitivity to interest rates as housing prices remain elevated. MBA’s purchase applications index dropped 4.9%. The refinancing gauge slumped more than 12%, the fourth decline in the last five weeks.
Mortgage rates track yields on 10-year Treasuries, which soared last week by a half percentage point as the trade war shakes global markets. The weekly surge in yields was the largest in more than two decades, raising fears the US is losing its status as the world’s safe haven. Yields have gradually retreated so far this week.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.